[PEN-L:30304] debt

["Ian Murray" <seamus2001@xxxxxxxxx>]

HoustonChronicle.com -- http://www.HoustonChronicle.com | Section: Business
Sept. 16, 2002, 10:45PM
Debt climbs at fastest rate in over 10 years, report says
Chicago Tribune

Experts worried about ever-increasing consumer and business borrowing had new
cause for concern Monday, as a new Federal Reserve report showed overall debt
levels jumped at the fastest rate in over a decade.

The Fed's massive but often overlooked flow-of-funds report showed that total
debt outside of banks and the rest of the financial sector surged 7.8 percent in
the second quarter, much sharper than the first quarter's 4.8 percent rise and
the highest quarterly increase since 1989.

Overall, total nonfinancial debt outstanding, which includes home mortgages,
consumer credit and government and business debt, grew by nearly $400 billion,
to $19.99 trillion.

Several economists and stock market analysts have fretted in recent weeks about
debt levels and the ability of consumers and businesses to meet their
obligations. A surge in defaults could have drastic effects on the economy and
stocks, they say, and even relatively small gains in debt loads can crimp new
spending, which would damage the still-fragile economic recovery.

Others, however, note that debt as a percentage of net worth, while rising, is
generally below peak levels of a decade ago. They say the situation, while not
ideal, is manageable.

for the FoF:

http://www.federalreserve.gov/Releases/Z1/Current/